Category: Business

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Your business isn’t your family

Okay, some of us run a family business, but it should still be run along professional lines.

Employees may underperform and you will need to follow your disciplinary procedures to bring them back in line. You may even need to sack them if they are more of a liability than an asset so make sure that you do everything legally. Employees may leave you for better pay, conditions, or opportunities. Or you may need to make their positions redundant if you need to reorganise the business or make cutbacks if the business is underperforming.

While many clients will become friends yours is primarily a business relationship. Why would you offer ‘mates rates’ when your mates should be supporting you to set up your new business? Would they give up part of their salary as willingly as you drop your prices? You may need to be disciplined about only answering business queries during working hours and not in the middle of your sister’s wedding. Real friends wouldn’t want to spoil your free time.

Clients may leave if they feel the grass is greener on the other side in terms of price or services. Similarly we need to charge commercial prices to everybody and to increase those in line with inflation each year.

If you treat your business as a business and your friends as good employees or good clients then you will be able to offer a much better service overall. If you have to sell yourself cheap or accept poor standards to keep their friendship then are they really friends?

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Time Management Tips for Entrepreneurs 

If you’re managing a business then you probably have 101 tasks requiring your attention even if you have delegated as much as you can. 

  1. Schedule tasks in your calendar. Knowing how long each task will take will help you to understand what is realistically achievable 
  1. Prioritise tasks based on importance and urgency. We use internal deadlines to ensure that we’re not running up against important external deadlines but also to keep internal projects on track 
  1. The way to eat an elephant is one mouthful at a time. Break larger tasks into smaller, bite-sized steps. This seems less daunting but it may also be possible to fit a smaller task in around larger ones so that you make forward progress. 
  1. Avoid multitasking to maintain focus. Easier said than done! I often flit around when I have ‘too many’ tasks on my list and end up achieving nothing as I stop-start each task multiple times. 
  1. Set aside specific times for checking emails and messages. I do a quick triage each morning and then answer emails and call backs from 4pm (unless I’m doing the flitting around in 4 above!) and all of Monday is to clear leftover bits. 

I’d love to hear what works for you. Any habits or apps to recommend? 

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How to achieve work-life balance as a business owner 

You may have started your business with the intentions of having a better work-life balance or for some other reason and the work is now taking over your life. If so here are a few tips. 

  1. Set clear boundaries between work and personal time (and place). I find it helpful to clear my desk each evening and to ensure that I actually log off my computer (it’s also better for keeping your software updated) 
  1. Prioritise tasks – you’ve probably already seen the matrix of urgent vs important where you start with the tasks that are urgent AND important 
  1. Delegate where possible – be aware of how much you could earn in an hour and delegate everything possible to somebody with a lower hourly rate. This might be a virtual assistant, a junior member of the team, or even buying in help at home. 
  1. Schedule regular breaks – I always block out an hour for lunch and an alarm to finish working at the end of the day. My need for tea ensures that I take regular breaks to make another drink (or go to the loo after drinking so much!) 
  1. Schedule holidays – I start each year by blocking off the last week of March, June, September, and December as well as a week around my birthday. I sometimes need to change these dates nearer the time but it means that I don’t book meetings in when I expect to be away. 
  1. Practice mindfulness or other stress management techniques – I don’t meditate but I do enjoy running and letting my brain unwind. It’s how I originally got into triathlons 
  1. Create a flexible work schedule that works for you and your life – this isn’t just for the business owner as all our team have this option 
  1. Monitor KPIs around this – I track my weekly working hours and also my profit per hour. 

What are your top tips for work-life balance 

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Cyber security tips for small businesses 

When we do a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis for our business cyber security is pretty high up our list of risks. As accountants we hold a lot of confidential data of a personal and/or commercial nature so it is important that we do everything that we practically can to protect that data.

Having worked in the Disaster Recovery team during my stint in IT here are my top tips on cyber security:

  • Use strong, unique passwords for all accounts.
  • Use a password keeper such as Onepass to store these so that they can be used on your different devices.
  • Implement 2 factor authentication
  • Don’t share accounts/software licences!
  • Always use the latest version of your software and instal updates asap as these will include security updates
  • Train your team on best practice
  • Do not display your router password to casual visitors or on the router itself – this is a particular weakness for those of us who use cloud software
  • Backup regularly and hold the data securely. Cloud software can help with this.
  • Take extra care to look out for phishing attacks. Hover over senders’ email addresses and any links. Any HMRC/government links should end .gov.uk
  • Delete access for former employees as soon as they leave.

I recommend getting CyberEssentials certified. Find out more here: https://www.gov.uk/government/publications/cyber-essentials-scheme-overview

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When can you afford to retire? 

At some point we all want to retire from our business so it’s important to understand how that will impact on our future income. For me, this starts with a personal balance sheet.  

Whilst there’s no financial reporting standard for this here are the sort of things that I include: 

  • Sale value of your business less any costs of sale and capital gains tax 
  • Property less outstanding mortgages, costs of sale and capital gains tax 
  • Pension funds 
  • Other investments 
  • Long term savings 
  • I exclude short terms savings and current accounts as these are usually less substantial and they probably need to be maintained into retirement. 

I then look at a forecast of personal income and outgoings.  

Income might include 

  • Salary and dividends from your own business 
  • Pension income 
  • Rental income 
  • Other investment income 
  • Sale of assets (which might reduce income that those assets generate) 
  • Gifts and inheritances 

And outgoings would be your household bills, hobbies, holidays, etc 

When doing a long terms forecast these will change over time as you plan in major life events such as buying property, weddings, children, school fees, sale of property, cashing in some of the investments above, retirement homes, crises and even nursing homes.  

As with any long range forecast there are huge assumptions to be made, your date of death being one of them, but it is a good start on when you can afford to retire and what sort of lifestyle you will be able to achieve. 

Also worth mentioning that you should ensure that you have a valid will, and power of attorney for your finances, health and business. 

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Plan your business like a marathon 

Building your business isn’t a sprint but a marathon. It takes a bit of planning. 

  • Plan – find a plan that is right for you. Right for where you are now, where you want to be, and how much time you have available 
  • Track performance – what KPIs will show that you are on track? These should be things that you can control such as how often you train each week, rather than how fast you will be by a certain date. How many times do you need to show up on line each week? How many networking events? How long do you need to write for each day (and do you take weekends off?) to complete that book? 
  • Track your progress – each time you run a longer distance or a faster time record this PB (personal best). In business this might be tracking your GRI (gross recurring income), your record month of sales, number of clients, average fee etc. 
  • Invest in the right equipment – a good pair of trainers (and the right sports bra) can make your training so much more comfortable. Have the right people and technology to maximise your chances of success. 
  • Running partner/group – these will provide moral support, accountability, and they will run alongside you as you each focus on your personal goals 
  • Coach – as an athletics coach as well as a business coach I can’t recommend this highly enough. Somebody with technical expertise, moral support, and accountability will help you get to your destination faster. 
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Limitations of AI 

At risk of sounding like a luddite: AI is not the answer to everything. 

AI has the potential for so much good but people really don’t understand the limitations.  

  • The main one for accountants is that information put into the free version of ChatGPT is not confidential. For this reason we use Copilot as our default sand other Ais as needed so that client information is never accidentally compromised. 
  • The free version of ChatGPT is only based on information available up to a certain point in time so it excludes more recent updates and data.  
  • AI is the answer to all the problems that you never knew you had! Originally AI was developed as a solution to certain problems but now developers are busy creating solutions to problems that don’t really exist … until their product team tell you that they do. 
  • AI is only as good as the user. As with all technology, garbage in = garbage out. You need to train your AI in exactly the same way that you would train a new apprentice in your organisation. 

The biggest problem is that LLMs (large language models) like ChatGPT are prone to ‘hallucination’. They extrapolate the known data in order to fill in any gaps. Like the accountant’s nightmare ‘Dave at the pub’, who tries to help everybody with doubtful tax advice, hallucinating AI is about as reliable as a toddler with a face full of chocolate denying that they’ve been stealing Easter eggs. 

One AI quoted from my talk at an accounting conference earlier this year. It was probably a great talk but … I didn’t speak at that event! If a journalist was to report this badly they would be out of a job and probably laughed out of their industry.  

I love AI and use it regularly in my businesses but please remember to approach with caution. 

PS If the conference in question would like me to do a talk on this topic I’d be happy to oblige 😉 

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Which CRM? 

After last week’s post I was asked which CRM we use.

As I run three businesses (Minerva Accountants, Hudson Business Advice, and Minerva Technology) we use two different systems.

You can start off with a free CRM or even set up your own spreadsheets of contacts and actions but at some point you will (hopefully) grow to a point where you need something with a bit more oomph and functionality so you will need to invest a bit of money. Fortunately most CRMs have the ability to import a spreadsheet of contacts and data so it’s easy to migrate. What takes more time is setting up your workflows and funnels.

At the moment we use Active Campaign (AC) across all three businesses because it has good email campaign functionality and we can set up different tags and funnels for each business. This includes sending out these weekly Top Tips to two different mailing lists. It connects with Outlook and we can set up sales funnels and keep notes. We use this primarily for prospects and running the coaching and tech business which have simple workflows.

To run the more complex business of Minerva Accountants we use Bright Manager (BM). Running an accountancy (or bookkeeping) business comes with all sorts of deadlines and checklists which BM can handle. The software comes with predefined workflows but you can tweak these or create your own. There are many competitors at the moment, all with their own strengths and weaknesses, and the market is changing rapidly. For us the downside of BM is the reporting and, with no API available, we have to pull out reports into Excel and manipulate them there. I have spoken to their product team about this so watch this space. Having a separate workflow system means that personal, essential emails and reminders are separate from the general ones. Clients are enrolled on both systems so they still receive the Top Tips and any bonus offers through AC.

Specialist software for accountants includes Engager, Karbon, FYI and others but, in my opinion, there is plenty of room for somebody to sweep the market at the small business end.

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Implementing a CRM system in your business 

Once your business outgrows you and a few contacts on your phone it is worth implementing a proper CRM (customer relationship management) system. 

  • Register with ICO (Information Commissioners Office) and pay the necessary fee. This will vary with the size of your business but starts at £40 per year. Ensure that you record all the ways that you will use personal data. 
  • Choose a CRM system that suits your business needs. Do you want to track prospects or to hold more detailed information for existing customers. DO you need to include tasks and workflows? Do you want it to integrate to your emails or a a bulk mailing system? 
  • Give all your team access to add, update, and generally use the system. This will ensure that they are informed before all client contact. 
  • Regularly update and maintain customer data. This is one of your responsibilities under GDPR but it also makes sense for the business to hold the lates information 
  • Use CRM analytics to improve customer relationships and to track which marketing campaigns are most effective 
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Tax Tip – Recharging expenses vs disbursements 

If you pay for something on behalf of your customer and then invoice it to your customer you may be able to treat it as a disbursement. This will be an advantage if the supplier doesn’t charge VAT or if the customer can’t reclaim VAT.  

When invoicing disbursements to your customers you don’t add VAT and you can’t claim VAT on the purchase because you are acting as an agent. 

A disbursement must meet 8 conditions. VAT: costs or disbursements passed to customers – GOV.UK 

Most business purchases are expenses, not disbursements, and you should add VAT to the amount that you invoice to your customer. You can also reclaim any VAT that you pay your supplier. The amount you charge your customer is a commercial decision so it may be the cost, or the cost plus a mark up, or any other amount that you agree. 

Some examples of costs that are usually recharges and not disbursements: 

  • Train ticket to visit your client or to travel as part of their job. You should add VAT to any recharge because the flight is for you and not the client. 
  • If recharging postage to your customers you should add VAT even though postage is usually exempt. 

The most common recharge we see is mileage. You can claim the standard mileage allowance (usually 45p but see mileage rates: https://minervaaccountants.co.uk/tax-tip/tax-tip-38/) and reclaim any VAT on the fuel element. When recharging this to the client you would add VAT to the rate (which may be 45p or something else) that you have agree with them